Migration outflow shows Darwin’s economic weakness and need for major projects to generate employment opportunities
Darwin has to be able to convince residents to stay, following the reveal that thousands have left the Top End over the past year.
“The latest population data from the ABS confirms that interstate migration in NT was minus 3,178 people for the last calendar year,” says Propertyology managing director Simon Pressley.
“Darwin’s strengths are its proximity to large gas reserves, a strong military presence, and unique tourist attractions; however, it is currently lacking a couple of major job-creation projects to get things kicking again.”
With Darwin being a small city, a big project could have a significant effect on the economy. According to reports, a large gas reserve may have been discovered 500km from Darwin – and this could give the economy its much-needed boost.
However, the current reliance on the gas industry does not spell good news for Darwin in the long run. Should the city experience an upswing, it is likely to last only for a short time.
“Darwin is a much smaller city than Perth, so you do need to understand that the dynamics of the city are a little bit different to a city like Perth, which in the longer term has stronger growth prospects,” explains Nerida Conisbee, chief economist at REA Group.
“Darwin is in the same position as Perth. It had a really bad downturn following the end of the mining boom. [However,] Darwin might be a little ahead of Perth – the level of demand seems to be a little more advanced.”
While demand has declined sharply during Darwin’s down period, Herron Todd White notes that investors are still showing some interest in units.
“The most distinct difference in the market we are currently in compared to the market 18 months ago is that lease terms are significantly shorter,” HTW states in its Month in Review report for August 2017.
“Previously we have seen lease periods of up to three or four years at an annual fixed percentage increase; however, as we move down the construction time line for some of Darwin’s major projects and the closer we get to completion, those lease terms are naturally becoming shorter, now negotiated on multiple lots of six month periods for up to 18 months or so.”
In terms of returns, Darwin could certainly be regarded as a good spot for investors; however, investors will need to be aware of what their goals are, especially with respect to capital growth.
SUBURB TO WATCH
MILLNER: North Darwin suburb offers strong yields
With an indicative gross rental yield of 5.5% for units and 5.1% for houses, this northern suburb in the city of Darwin could be a worthwhile opportunity for investors.
Around 10km north of the CBD, Millner is centrally located between three main arterial roads and borders Darwin International Airport, a strong employment base. It also houses the city’s only velodrome, a large shopping centre and two primary schools.
House prices currently sit at a median of $556,000, while units are around the $360,000 mark. Despite the affordable prices, the average weekly advertised rent for houses is fairly high, at $490, while units can expect to make a respectable $375 per week.
Yield: Units in Millner are recording an average yield of 5.5%
Affordability: Units have a median value of under $360k
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